Gov. Lamont Proposes New Taxes on Legal and Real Estate Services

Governor Lamont Made an Address on his budget and shared a snippet on twitter.

Also Increases Conveyance Tax On Expensive Homes

First-term Governor of Connecticut, Ned Lamont, is introducing a new bill – to implement his proposed budget – that would expand the sales tax on services in Connecticut to legal and real estate related services. The bill also increases the conveyance tax on homes over $800,000.00.

You can see the full version of the proposed bill here: The good news is that many of the changes in the bill, if it becomes law, will not go into effect until 2023.

What types of “legal services” would now have to charge sales tax?

The proposed bill uses NAICS industry codes to outline the types of legal services that would have to charge sales tax to clients and pay over that sales tax to the State on a monthly basis.

The legal service providers covered under the new expanded sales tax law are:

  1. Lawyers;
  2. Notaries;
  3. Process servers;
  4. Paralegals;
  5. Settlement Agents; and
  6. Title companies.

What types of “real estate services” would now have to charge sales tax?

Under Lamont’s proposal, the real estate service providers that would have to charge and remit sales tax in Connecticut are:

  1. Real Estate Brokers;
  2. Real Estate Agents;
  3. Property Managers;
  4. Appraisers;
  5. Inspectors;
  6. Escrow Agencies or Escrow Companies; and
  7. Real Estate Consultants.

[NOTE: Some of the services listed above may already be subject to sales tax collection and reporting earlier, but if the Governor Lamont’s Proposed Bill is passed (without changes to these provisions), there will be no question that the above service providers will be subject to sales tax.]

Top CT Real Estate Conveyance Tax Would Be Increased to 1.5%

Right now, every time residential real estate is sold in Connecticut, the Seller pays 1% in conveyance tax which is divided in the following way:

For houses sold for under $800,000: 0.75% is paid to Connecticut and .25% is paid to the local government.

Currently, for homes over $800,000, the seller pays an higher conveyance tax – at the increased rate of 1.25% – to Connecticut for sales proceeds over the $800,000.00 threshold (not a rare occurrence in most populated areas of CT!)

Proposed Connecticut Tax Laws would nickle and dime property owners, along with small business service providers and their clients.

The proposed bill would actually increase the State’s portion of the Conveyance Tax to 1.50% on any amount over $800,000.00 in the conveyance of commercial real estate.

This change would take effect this year on July 1st!

The Impact On Real Estate Clients

These new laws will directly impact the cost of buying, selling and maintaining real estate in Connecticut, whether for residential, business or investment purposes.

Buyers of real estate would pay sales tax on realtor admin fees, title search and title insurance fees, attorneys fees, paralegal or document preparation fees, appraisal fees, inspection fees, and any consultation costs.

Sellers of real estate will have to pay sales tax on attorneys fees, realtor fees, real estate broker property advertising charges, paralegal or document prep fees, release tracking, and an increase in a portion of the conveyance tax over $800,000.00 in purchase price.

The Impact on Legal and Real Estate Service Providers

The impact on the legal service and real estate service providers will be severe in the beginning. The learning curve for how to properly charge, collect, track and remit sales tax will take some time. The increased time to handle this compliance may take away from time spent doing the actual work or servicing the client. Over time, Service providers will probably outsource these tasks to third parties, meaning that consumers of these services would pay more for those services.

Rate Change for Title Insurance on Real Estate as of February 3, 2020

Due to significant increased costs in doing business, namely when it comes to regulatory compliance, Connecticut Attorneys Title Insurance Company (CATIC®) recently requested and have been approved for a rate change on title insurance on real estate in Connecticut. This will be only their second rate increase since 1992.

The new rates on title insurance for real estate in Connecticut are essentially a 9% increase.

The rate change will take effect with mortgage originations occurring on and after February 3, 2020.

For a LIVE accurate quote on title insurance for real estate in Connecicut, visit

CP40 form From IRS We assigned your overdue tax account to a private collection agency

The IRS Won’t Call You. They hired Debt Collectors to do that for them!

Congress Mandates IRS Use Private Collection Companies to Collect Past Due Taxes Beginning Spring 2017


CP40 form From IRS We assigned your overdue tax account to a private collection agency

Poor Eric!

I Received A Collection Letter Regarding My Taxes

IRS Now Uses Private Collection Agencies

As part of a law passed in December of 2015, the IRS will begin using private collection agencies as of Spring 2017. The IRS has actually had the option to use private agencies and had DECIDED NOT TO. As the taxpayer advocate mentions in her 2013 report, it was not very effective. However, Congress decided that they know better and passed a law that states the IRS SHALL use private collection agencies. The idea is to remove some of the cost of collection from the IRS and lower the impact on “government spending”.

5 Reasons Why IRS Using Private Debt Collectors Is A Bad Idea

  1. INCREASE IN IRS SCAM ACTIVITY. Previously, when people received scam calls from fake IRS agents, the IRS would release notices stating that they will never call you and any call is a scam. However, now that they are using private collection agencies, there will be legitimate calls regarding IRS debt. This plays right into the hands of scammers and con artists!
  2. PRIVATE DEBT COLLECTORS HAVE LESS POWER THAN THE IRS. Debt Collection Companies must follow the Fair Debt Collection Practices Act. The IRS only has to follow it’s own policies and procedures and has powers way beyond a collection agency. On top of that, the tax debt collection agencies will have to follow BOTH Fair Debt Collection laws AND IRS policy and procedures.
  3. THE PEOPLE CAN’T PAY. The accounts the IRS plans to pass onto the collection agencies are those that are grossly past due. These people couldn’t afford to pay when it was the Federal Government asking, the money isn’t magically going to appear because a debt collector called.
  4. IRS USING PRIVATE DEBT COLLECTORS HAS FAILED BEFORE. That’s right, they already tried this! and Failed! When the IRS used private debt collectors between 2005 and 2009, they eventually concluded that it wasn’t cost effective – after they were committed to the idea for a while.
  5. IT’LL PUSH PEOPLE TO BANKRUPTCY. When you have already had the weight of tax debt hanging over you, the additional burden of constant calls from a debt collector could be the final straw that pushes people to bankruptcy. Bankruptcy isn’t a guaranteed solution to tax debt, but many more people will begin looking into it with tax collectors calling.


Why Do I Have To Pay A Capital Contribution To The Condominium Association When Buying A Condo In Connecticut?

Capital Contribution to HOA

Closing Costs Paid to Condo Association

Today, I had a closing with a client n a condominium in New Milford. The particular condominium association (or home owners association, commonly called “HOA”) had a condition to buying a property there: he had to make a “capital contribution” to the association accounts in the amount of two months of HOA fees. This left my client wondering: “Why do I have to a capital contribution to the condo association?”

FHA Guidelines for Condo Associations

The answer here is regulation by the Federal Housing Authority, or “FHA”. In order for potential buyers to be able to get FHA loans for units in a certain condo complex, that complex has to meet numerous guidelines. Some of these guidelines pertain to the fees, budget, and funds on deposit of the condo association.

Keep in mind, associations DO NOT have to comply with FHA guidelines. They do it as a courtesy to potential homewoners, so that they can get FHA and CFHA loans for the units in that complex. This is important because it allows the buyers to get loans with as low as 3.5% down and great interest rates if they qualify for FHA loans. This is also good for potential sellers of condominiums because it increases the number of people that can afford to buy the units in FHA approved complexes.

Which FHA regulations are Capital Contributions meant to meet?

Adequate Reserve Funds

One of the FHA requirements for condominiums is that they maintain an adequate reserve on deposit. There is no set dollar amount. However, there are two main concerns:

  1. Funds to cover all insurance deductibles; and
  2. Funds to cover repairs and replacements for two years.

By charging a new unit owners a Capital Contribution, the HOA can make sure they have sufficient funds on deposit and can remain compliant with FHA regulations.

Delinquent HOA Dues

Another FHA requirement is that no more than 15% of unit owners can be 60 or more days behind on their HOA dues.

By charging two months of dues up front, if the owner becomes ill or loses their job and cannot make their HOA payments, the HOA can give themselves a buffer on collecting those overdue HOA fees from unit owner.

Questions Aout Buying a Condo in Connecticut? Call Attorney Glouzgal at 203-794-6691

chfa downpayment assistance

CHFA Loans – Connecticut Housing Finance Authority Mortgage Assistance

CHFA Mortgage Assistance for Connecticut Home Buyers

The Connecticut Housing Finance Authority, or CHFA, provides mortgage assistance programs to homebuyers in Connecticut. To receive CHFA mortgage assistance, you must be a first-time homebuyer or buying a home in a revitalization zone and qualify for CHFA assistance based on income. CHFA offers both low interest rate loans as well as downpayment assistance.

CHFA mortgages can be used to purchase single family homes, condos, multi-family homes, and even some mobile homes.

The current CHFA interest rate is 3.5% for government insured mortgage loans and 3.75% for non-insured mortgage loans.

CHFA First-Time Homebuyer Mortgages

Under the CHFA, first-time homebuyers and those who have not owned a home in over three years qualify for the First-Time Homeowner program. The Buyer, or borrower, must also mee

There are also income limits as well as property value limits for CHFA mortgages. The Buyer, or borrower, must make less than a certain amount, which is $87,800 for a home of 1 to 2 people, and $100,970 for a home of three or more people. There are also some income limit differences depending on the town you are looking to purchase in. The property value limits also vary by town. The income and property value limits for specific towns are listed here: CHFA Income & Value Limits by Town.

CHFA Down Payment Assistance

As a separate service from its low interest mortgage loans for low-income households, CHFA also offers downpayment and closing cost assistance. Down Payment Assistance is offered to borrowers who can afford to pay both loans but lack the savings to make the downpayment (less than $10,000.00 total household savings).

The minimum for Down Payment Assistance loan amount is $3,000, with the maximum being the minimum downpayment amount for the actual CHFA mortgage. In most cases, the Down Payment Assistance interest rate will match the CHFA mortgage interest rate, but it can vary and could be up to 6%.

CHFA Revitalization Zones

CHFA also offers mortgage assistance for homebuyers looking to purchase homes in certain areas marked for revitalization. These are areas where the Federal Government has determined would benefit from and increase in home ownership.

In the CHFA Revitalization Zones, the first-time homebuyer requirement is suspended, 1/4% reduction in CHFA published interest rate, income limits do not apply unless also seeking downpayment assistance, and mortgage insurance may be suspended.

In Connecticut, these revitalization areas include Ansonia, Bridgeport, Danbury, Derby, East Hartford, Groton, Hartford, Manchester, Mansfield, Meriden, Middletown, New Britain, New Haven, New London, Norwalk, Norwich, Stamford, Torrington, Windham and Waterbury.

The Lender you choose can give you more information about the details, costs, benefits and downsides of a CHFA mortgage. Click for a List of Participating CHFA Lenders